Rental Yield Calculator

What is rental yield and how is it calculated?

Rental yield measures the annual income a property generates as a percentage of its value. Gross yield is the simplest version: annual rent divided by property value, multiplied by 100. A property worth £200,000 renting for £900/month produces a gross yield of 5.4% (£10,800 ÷ £200,000 × 100). Net yield deducts the costs of owning and operating the property — voids, management fees, insurance, maintenance — to show what you actually earn as a percentage of the asset value.

Gross vs net yield — why the difference matters

A gross yield of 6% sounds healthy, but after accounting for 2 void weeks, a 10% management fee, and £100/month in running costs on a £200,000 property, net yield typically lands at 4%–4.5%. The gap between gross and net is where many new landlords are surprised. Insurance, mandatory compliance costs (gas and electrical certificates), routine repairs, and letting agent fees are unavoidable — budgeting them in from the start gives a realistic picture of what the investment actually returns.

What yields are typical in Leicester?

Leicester has been one of the higher-yielding cities in the Midlands for residential buy-to-let. Typical gross yields across the city range from 5% to 8%, with the highest yields concentrated in areas with strong student and professional renter demand: LE1, LE2, LE3, and LE4 postcodes closest to the two universities and the city centre. Purpose-built student accommodation and HMOs (houses in multiple occupation) often achieve gross yields of 9%–12%, though they require more active management and carry higher vacancy risk between academic years.

Void periods — what to budget for

The national average void period is approximately 18–21 days per year. In practice, a well-maintained property in a high-demand area managed proactively may achieve under one week void per year; a harder-to-let property in a supply-heavy area may run to 4–6 weeks. Every week of void on a £900/month property costs approximately £208 in lost rent. Budgeting 2–3 void weeks per year as a baseline is prudent; adjust higher if the property is harder to let or you are new to self-management.

Cashflow vs yield — which number matters more?

Yield measures income relative to the asset value — useful for comparing properties. Cashflow measures what actually lands in your bank account each month after all costs including the mortgage. A property with a 6% gross yield but a large mortgage may run at a monthly deficit of £100–£200 once the interest payment, management fee, and insurance are deducted. Cashflow positive means the rent covers all costs including mortgage; cashflow negative means you are subsidising the investment from other income. Our calculator shows both figures — because positive cashflow is often more important than headline yield for day-to-day financial planning.